Practical Application of Insurance Bonds

For an investment product that was almost forgotten a decade ago, the insurance bond (also known as an ‘investment bond’ has re-emerged as a tax-advantaged long-term investment option, especially for higher-income earners.

The naming ambiguity comes from the fact that insurance bonds are a type of life insurance investment contract; but in practice they function as multi-purpose life-event savings and investment vehicles that are used to prepare for a wide range of life events, such as funding education costs, house deposits, and health and aged-care costs.

Insurance bonds are enjoying a renaissance, as fatigue with superannuation change increases and investors look for specialised options that complement super, and suit their circumstances better, offering flexibility from a taxation, estate planning and even Centrelink perspective, to support any retirement income goals, independent of the Superannuation (SIS) legislation.

In the June edition of the INPractice webinar series, The Inside Network will provide Australian financial advisers with a comprehensive understanding of insurance bonds and their practical application within client portfolios. Designed to equip advisers with the knowledge to incorporate insurance bonds effectively, the session covers key topics such as:

• Product Features: Understanding the structure of insurance bonds, including the role of the life insurance policy and how it interacts with investment choices;

• Tax Advantages: An overview of the tax-deferred growth and taxation on withdrawals, highlighting the strategic benefits for clients with long-term investment horizons;

• Wealth Accumulation and Estate Planning: Practical strategies for using insurance bonds to achieve tax-effective wealth growth, minimise estate tax, and create a legacy for beneficiaries; and

• Suitability for Clients: Identifying which clients—whether high-net-worth individuals, retirees, or those seeking tax-efficient strategies—can benefit most from insurance bonds.

By the end of the session, participants will be able to confidently assess whether insurance bonds are suitable for their clients and understand how to integrate them into broader financial strategies.